Himachal Pradesh High Court
Between vs Gujarat Water on 31 August, 2022
Author: Satyen Vaidya
Bench: Satyen Vaidya
Reportable/non-reportable
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
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ON THE 31st DAY OF AUGUST, 2022
BEFORE
HON'BLE MR. JUSTICE SATYEN VAIDYA
REGULAR FIRST APPEAL NO. 240 OF 2002
Between:-
SHRI ARVIND CHAUDHARY,
SON OF SHRI C.N. CHAUDHARY,
RESIDENT OF HOUSE NO. 3309,
SECTOR 32-D, CHANDIGARH.
....APPELLANT.
(SH. ARJUN LALL, ADVOCATE)
AND
SHRI HARISH CHANDER, PROPRIETOR
M/S RAMA CEMENT AGENCY, LADWA,
DISTT. YAMUNANAGAR, HARYANA.
....RESPONDENT
(SH. VARUN RANA, ADVOCATE)
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Reserved on: 25.8.2022
Date of decision: 31.8.2022.
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This appeal coming on for pronouncement of
judgment this day, the Court passed the following:
JUDGMENT
By way of instant appeal, appellant has assailed judgment and decree dated 17.7.2002, passed by learned Additional District Judge, Sirmaur District at Nahan, H.P. in ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -2- Civil Suit No. 1-N/1 of 2001/1998, whereby the suit of the appellant has been dismissed.
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2. The parties herein shall be referred by the same status, which they held before the learned trial Court i.e. appellant as plaintiff and the respondent as defendant.
3. Plaintiff filed a suit for recovery of Rs. 3,91,984/-
along with interest pendente lite and future before the learned District Judge, Sirmaur at Nahan under Order XXXVII of the Code of Civil Procedure (for short, the Code). According to plaintiff, defendant had borrowed a sum of Rs. 2,30,000/- from him in August, 1995 with a promise to return the said amount till December, 1995. Defendant had issued two post dated cheques dated 10.10.1995 and 5.12.1995 in the sums of Rs.
1,30,000/- and 1,00,000/- respectively, both drawn on State Bank of Patiala, Industrial Branch, Yamunanagar, Haryana.
These cheques were issued with assurance that the cheques would be honoured on presentation. However, when the cheques were presented, those were dishonoured and remained unpaid, forcing the plaintiff to file the suit. Plaintiff also claimed interest at the rate of 24% per annum on the premise that the defendant had agreed to pay such sum of interest in case he failed to pay the amount within the agreed period.
::: Downloaded on - 31/08/2022 20:04:57 :::CIS -3-Accordingly, a sum of Rs. 1,61,984/- was calculated towards interest and by adding the same to principal amount of Rs.
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2,30,000/-, the suit amount was calculated at Rs. 3,91,984/-.
4. Defendant entered appearance on 7.12.1995 and on the same day, notice of summons in Form 4 A in 'Appendix B' of the Code was served upon the defendant through his counsel. Accordingly, defendant filed an application under Order XXXVII Rule 3 of the Code, seeking leave to defend on the ground that the cheques, on the basis of which, the suit was filed were not issued in favour of plaintiff. Defendant specifically denied receipt of any amount as loan from the plaintiff. He also asserted that the cheques were without consideration. As per defendant, the cheques were issued as security cheques on the asking of Sh. C. N. Chaudhary, father of plaintiff, who was dealing in steel Products. Since the defendant wanted to have business transactions with Sh. C.N. Chaudhary, therefore, in order to ensure the regular payments, defendant had issued security cheques. The cheques were issued in the name of plaintiff on the asking of Sh. C. N. Chaudhary. Defendant thus denied the allegations in the plaint and existence of any liability towards plaintiff.
::: Downloaded on - 31/08/2022 20:04:57 :::CIS -4-5. Plaintiff contested the application of defendant, seeking leave to defend. The learned trial Court allowed the .
application of defendant and granted him leave to defend the suit in favour of defendant vide order dated 21.2.2000 and framed the following issues:
"1) Whether the suit U/O 37, Rule 2, CPC, by the plaintiff is not maintainable, as alleged. OPD
2) Whether the summons in Form IV-A in Appendix-B of the CPC have not been served upon the defendant in accordance with law, as alleged. OPD.
3) Whether the cheques dt. 5-12-1995 for Rs.
1,00,000/- and dt. 10-10-95 for Rs. 1.30 lac issued by the defendant have been without consideration. OPD
4) Whether this court has no jurisdiction, as alleged.
OPD.
5) Relief."
6. Defendant examined himself as his own witness (DW-2). He has also summoned and produced the records of Income Tax Returns of the plaintiff through DW-1. The cheques, on the basis of which, the suit was filed were exhibited as Ext. P-1 and Ext. P-2. Previous statement of plaintiff in proceedings under Section 138 of the Negotiable Instruments Act, 1881, recorded in the Court of Judicial Magistrate, 1st Class was proved as Ext. DX.
::: Downloaded on - 31/08/2022 20:04:57 :::CIS -5-7. Plaintiff examined himself as his own witness in rebuttal and closed the evidence.
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8. Learned Additional District Judge, Sirmaur at Nahan dismissed the suit of the plaintiff vide judgment and decree impugned in the present appeal.
9. I have heard Mr. Arjun Lall, learned counsel for the plaintiff and Mr. Varun Rana, learned counsel for the defendant and have also gone through the records carefully.
10. At the outset, Sh. Arjun Lall, learned counsel representing the plaintiff laid challenge to the order dated 21.2.2000, passed by the learned Additional District Judge, Sirmaur at Nahan in Civil Suit No. 1-N/1 of 2001/1998, whereby the defendant was granted leave to defend the suit. He contended that no grounds were made out for leave to defend and thus, the suit was liable to be decreed at that stage only. In support of his argument, learned counsel for the plaintiff has placed reliance on the provisions of Section 105 of the Code which reads as under:
"(1) Save as otherwise expressly provided, no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but where a decree is appealed from, any error, defect or irregularity in any ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -6- order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal.
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(2) Notwithstanding anything contained in sub-section (1), where any party aggrieved by an order of remand from which an appeal lies does not appeal therefrom, he shall thereafter be precluded from disputing its correctness."
11. He also placed reliance upon the following extract from the judgment passed by the Hon'ble Supreme Court in Wada Arun Asbestos Private Limited vs. Gujarat Water Supply and Sewerage reported in 2009 (2) SCC, 432 :-
"15. Where a conditional leave is granted and the conditions therefor are not complied with, a judgment in favour of the plaintiff can be passed. It is not in dispute that the first appeal was maintainable. Where a decree is appealed from, any error, defect or irregularity in any order affecting the decision of the case may be set forth as a ground of objection in the memorandum of appeal as envisaged under Section 105 of the Code of Civil Procedure.
21. We fail to persuade ourselves to agree with the contention of Mr. Chitale that although a revision from an order granting conditional leave was maintainable, the same could not have been a subject matter of challenge in an appeal from a decree as envisaged under Section 105 of the Code of Civil Procedure."
12. On the other hand, Sh. Varun Rana, learned counsel for the defendant has contested the above said ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -7- argument of learned counsel for the plaintiff on the ground that order dated 21.2.2000, passed by the learned trial Court has .
attained finality and could have been challenged by the plaintiff immediately after passing of the said order. It has also been submitted that even otherwise, order dated 21.2.2000 did not suffer from any illegality as the defendant had been able to make out grounds for grant of leave to defend.
13. On the consideration of the provisions of Section 105 of the Code as also the ratio of judgment in Wada Arun Asbestos Private Limited vs. Gujarat Water Supply and Sewerage, (supra), the contention raised on behalf of plaintiff needs to be upheld. Definitely, the order dated 21.2.2000 has affected the decision of the case. Had the defendant not been granted leave to defend, the suit would have been decreed in favour of plaintiff, whereas the same came to subsequently dismissed after entering into merits. Thus, plaintiff still has a right to assail the order dated 21.2.2000 in appeal filed against the final decree in the suit.
14. The question, however, arises as to whether leave was rightly granted?
::: Downloaded on - 31/08/2022 20:04:57 :::CIS -8-15. In B.L. Kashyap & Sons Ltd. vs. M/s JMS Steels & Power Corporation & another, reported in 2022 (1) Scale, .
614, the Hon'ble Supreme Court has held as under:-
"17.2. Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the Court's view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the Court.
17.3. Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -9- would appear to be a meritorious one. Even in the case of raising of triable issues, with the defendant indicating his .
having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the defendant fails to show any genuine triable issue and the Court finds the defence to be frivolous or vexatious."
16. From the aforesaid exposition, it is clear that while dealing with the application for leave to defend, the correct approach is not to proceed on the assumption that it should be allowed only in exceptional cases. Even in the case where triable issues arise from the fair and reasonable defence, disclosed by defendant, ordinarily the leave should be granted.
Any doubt regarding probability of defence enables the Court to put the defendant to terms for granting leave but it cannot be used as the reason to deny the leave. Keeping in view the above principles, it cannot be said that defendant had not been able to make out a reasonable defence. Defendant had come out with a plea that he had not taken any loan from the plaintiff and the cheques had been issued by him in the name of ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -10- plaintiff, on the asking of father of the plaintiff. Defendant had specifically pleaded that the cheques were handed over to the .
father of plaintiff as security cheques without date and the plaintiff had misused those cheques by writing the dates of his choice.
17. Learned trial Court had found the defence, raised by the defendant, to be probable and reasonable on the premise that the writing and ink of the dates mentioned in the cheques Ext. P-1 and Ext. P-2 was different than the writing and ink used for scribing name of the holder of the cheques and the amount mentioned therein. The above finding recorded by learned trial Court, in the order dated 21.2.2000, cannot be said to be illegal or perverse. It is also not a case where the order dated 21.2.2000 can be said to be without jurisdiction.
In such view of the matter, no illegality and perversity has been found in order dated 21.2.2000.
18. Sh. Arjun Lall, learned counsel representing the plaintiff next contended that the dismissal of suit of the plaintiff in the given facts and circumstances of the case was patently illegal. He argued that the initial burden to prove, the cheques Ext. P-1 and Ext. P-2, to be without consideration was on defendant. There was a specific issue framed in this behalf ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -11- and the onus was rightly placed on defendant. He further laid challenge to the impugned judgment being result of clear mis-
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appreciation of oral as well as documentary evidence. Learned counsel for the defendant, to the contrary, has supported the findings returned by learned trial Court. His contention was that the defendant had duly discharged the initial burden by examining himself and also producing documents Ext. D-1 and Ext. D-2, besides previous statement of the plaintiff recorded in proceedings between the same parties as Ext. DX.
19. Noticeably, defendant had not disputed his signatures on the cheques Ext. P-1 and Ext. P-2. He had also not disputed that those cheques were issued in the name of plaintiff with the amount filled therein. The only defence of defendant was that the dates were not written by him. The cheques, according to defendant, were undated and were given towards security to Sh. C. N. Chaudhary, father of plaintiff.
20. Section 118 of the Negotiable Instruments Act, 1881 reads as under:-
"118 Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:--
(a) of consideration--that every negotiable instrument was made or drawn for consideration, ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -12- and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was .
accepted, indorsed, negotiated or transferred for consideration;
(b) as to date--that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance--that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer--that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements--that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamps--that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course--that the holder of a negotiable instrument is a holder in due course:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
21. Section 139 of the Act ibid reads as under:
::: Downloaded on - 31/08/2022 20:04:57 :::CIS -13-"139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder .
of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
22. Thus, there is a presumption, though rebuttable, in favour of a cheque to the following effects:
(i) that the cheque was drawn for consideration,
(ii) it was made or drawn on such date as the cheque was bearing and the holder of the cheque was holder in due course and
(iii) that the holder of the cheque had received the cheque in whole or in part of any debt or other liability unless contrary is proved.
23. All above noted presumptions were also attached to cheques Ext.P-1 and Ext. P-2 and were required to be rebutted by defendant.
24. Defendant while appearing as DW-2 narrated such version in his examination-in-chief which was quite different to his pleadings in application for leave to defend. He stated on oath that he had been dealing with Firm Arsh Casting and had been purchasing steel from the said firm. Plaintiff was its proprietor. It was the plaintiff, who had demanded the cheques ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -14- from the defendant and thereafter he had issued the cheques Ext. P-1 and Ext. P-2 to the plaintiff without dates. He further .
stated that he had not taken any loan from the plaintiff and all his accounts with the firm 'Arsh Castings' were settled.
25. The shift in the stand of defendant is unexplainable.
Such shift gains special significance in the suit under Order 37 of the Code. Had the defendant taken the same stand in his application for leave to defend, as was later taken by him in his examination-in-chief, there was a clear possibility of different result. In his application for leave to defend, defendant had specifically mentioned that he had no dealings with the plaintiff and it was Sh. C. N. Chaudhary, father of the plaintiff, with whom, the defendant had been dealings. The cheques were issued by defendant on the asking of Sh. C. N. Chaudhary, whereas in his statement on oath, defendant stated that he did not even know that the father of plaintiff Sh. C. N. Chaudhary had no share in the firm. In his application for leave to defend, the specific stand of the defendant was that he had issued the cheques as security on account of his business dealings with Sh. C. N. Chaudhary, whereas in his statement before the Court, he mentioned to have issued the cheques to the plaintiff, though without dates. Defendant had not made any mention of ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -15- settlement of accounts in his application for leave to defend, whereas in his statement on oath, it was so stated.
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26. While being cross-examined on behalf of plaintiff, the defendant stated that he had business dealings with Arsh Castings since 1991 but the cheques Ext. P-1 and Ext. P-2 were issued in 1995. It was also stated by this witness that he had entered the goods supplied to him by Arch Castings in the books maintained by him. He clarified that he paid the cash on bills received from the Firm against goods supplied to him. He also admitted that he had been provided with the receipts of payments executed by plaintiff and were duly entered in his account books.
27. The sole oral testimony of defendant, made in aforesaid manner, cannot be said to be sufficient to rebut legal presumption attached to cheques Ext. P-1 and Ext. P-2. The different stands taken by the defendant in his application for leave to defend and in his deposition before Court casts serious doubt on the veracity of his defence.
28. Further, the case of defendant was based on the hypothesis that he had business dealings with Arsh Castings.
In his examination-in-chief, defendant had stated that the accounts were settled. In cross-examination, defendant ::: Downloaded on - 31/08/2022 20:04:57 :::CIS -16- specifically stated that he had maintained the account books and the entries with respect to dealings with Arsh Castings .
were also available. In these circumstances, the account books were the best evidence to prove the defence raised by defendant. Since the defendant had withheld the best evidence, adverse inference was liable to be drawn against him.
29. Learned trial Court has clearly misdirected itself by holding that the defendant had discharged its initial burden.
The facts noticed above, were completely ignored by learned trial Court. Once the defendant had failed to discharge his burden, learned trial Court had no option but to decree the suit of plaintiff in terms of prayer made therein.
30. Noticeably, learned trial Court while deciding issue No.3, appears to have been swayed by the fact that there was difference of writing and ink in the dates mentioned on the cheques Ext. P-1 and Ext. P-2 and writing and ink used for scribing other contents thereon. The learned trial Court had also erred in drawing adverse inference against the plaintiff for non-production of his accounts. Strangely, the learned trial Court had proceeded in the manner, as if the onus to prove issue No.3 was on plaintiff.
::: Downloaded on - 31/08/2022 20:04:57 :::CIS -17-31. In view of above discussion, the present appeal is allowed. Consequently, the judgment and decree dated .
17.7.2002, passed by the learned Additional District Judge, Sirmour, District at Nahan, H.P. in Civil Suit No. 1-N/1 of 2001/1998, whereby the suit of the appellant was dismissed, is set aside. The suit of the plaintiff is decreed for Rs. 2,30,000/-
with interest at the rate of 9% per annum from 1.1.1996 till filing of the suit. Plaintiff is also held entitled to pendente lite and future interest at the same rate. Decree sheet be prepared.
Pending applications, if any, also stand disposed of.
Records of the learned trial court below be returned forthwith.
(Satyen Vaidya) Judge 31th August, 2022 (kck) ::: Downloaded on - 31/08/2022 20:04:57 :::CIS